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RICHARD N. HAASS: Why don't we get started?

Good afternoon. Welcome to the Council on Foreign Relations. Let me repeat our favorite mantra, to please turn off anything electrical other than a hearing aid.

Today's meeting is on the record. And let me also add that council members around the country and around the world are participating via teleconference.

We, as you know, have with us today the senior senator from the great state of Nebraska, a state that this institution bears more than a few connections to. I see Mr. Sorensen here, and Mr. Petersen has been known to claim heritage in Nebraska.

Before that he was a successful businessman. He had an impressive and courageous stint in Vietnam. As I said, he's now been in the Senate for, what, 11 years?

SENATOR CHUCK HAGEL: Yes.

HAASS: Eleven years, and is about -- his penultimate year; next year will be his last year in the Senate, out of choice.

And two other things I would say -- one is, like many of us he is an aspiring author, and in March of 2008 his book will appear: "America, the Next Chapter." And most important, next to the book, is that he's a member of the Council on Foreign Relations.

Chuck, you recently gave a speech on Iran that attracted a lot of attention in its calls for dialogue. Not everyone here necessarily had the chance to read the speech; some are simply waiting for the movie. (Laughter.) And if you had the ear of the president today, what would you tell him to do on Iran?

HAGEL: Richard, thank you for an opportunity to be with you today and with your members.

I sent President Bush a letter in October laying out what I thought might be helpful for him to consider in a strategic policy with Iran. And I said in that letter that I have believed for some time that, whether we're talking about Iran or Iraq or the episode that took place in Annapolis yesterday -- the Israeli-Palestinian issue -- it would require a regional strategic context. And I've never believed that you can take Iran and deal with that issue in a vacuum tube. There are too many intersecting, connecting dynamics in the Middle East, and they are all integrated and woven into one fabric. Each is a little different, obviously.

So in the letter -- to answer your question -- I sent to the president, I suggested he consider direct, unconditional, comprehensive bilateral talks, discussions -- not negotiations -- with Iran. I thought that as I made my case for that that it was particularly important that he seize the high ground that I believe is developing in the Middle East -- and we saw some indication of that yesterday, which we'll probably talk more directly about here in a few minutes. But there's a confluence of events that are taking place that give the United States and the world and the regional powers in the Middle East an opportunity with an open window that won't be there, I don't believe, for a long time -- an opportunity to seize the initiative and through a direct, comprehensive, unconditional dialogue, bilateral talk, something with Iran -- it seems to me that would be a good start.

The other point I made on this -- just quickly -- is if we don't do that, if we don't seize the moment then the status quo is not on the side of Israel, it is not on the side of the United States, it is not on the side of any of our interests. If you want to just take -- 60 percent of the oil reserves in the world are right there in that region, if you want to be mercenary about it but realistic about it. I mean, that should be interest enough that would govern our interest. So if we don't seize the moment with some initiative, then I fear we are going to unwind even further.

HAASS: Why is it -- you used the word "dialogue" twice and you've specifically precluded negotiations. If you're going to send your secretary of State or someone to Tehran or you meet in Geneva, why not have a comprehensive negotiation?

HAGEL: Well, I'm not sure you can negotiate at the front end of anything without some preliminary agenda-setting, some preliminary understanding of what each side wants to accomplish.

HAASS: Okay. You're not ruling it out. You just want to --

HAGEL: No, I would hope -- I would hope that we would get to that point. But it's why I always say when we talk about Iraq and political reconciliation, which we've seen none of in Iraq -- accommodation. Political accommodation seems to me has to come before reconciliation, and that's the same principle I would apply to Iran.

HAASS: And in principle -- one last question on Iran -- would you be willing to put on the table not simply the threat of increased sanctions but also the promise of incentives -- for example, dropping economic sanctions, security assurances, ending U.S. declaratory, say, support for regime change? Could you imagine all that as part of the mix?

HAGEL: Sure. I think it has to. And that's what I mean when I say "unconditional."

I mean, I never understood how the greatest power on Earth, who prides itself in diplomatic achievements and world leadership in every area, every arena, every discipline -- and yet we are afraid to talk with someone or we apply preconditions like it's a great privilege to talk to the United States. That's not diplomacy. That's not what diplomacy is about. And you don't talk to your friends -- your friends usually don't give you the problems. Some friends do -- (laughter) -- but you have none of those, Richard. But you --

HAASS: Problems or friends? (Laughter.)

HAGEL: You take the entire set and subset of these challenges that are part of how you use and why you use diplomacy, and included in that entire universe and arsenal are the economic powers, the military powers, the alliance powers and relationships, certainly diplomatic powers, and you apply those in a wise way with a clear objective.

HAASS: You mentioned two other subjects, so let me follow up. One was Iraq. You've been quite critical over the years over in particular how the policy was carried out. Is it your sense, though, that we've now reached a point where -- with the surge, with the talk now that Dave Lute (sp) mentioned the other day of sitting down with the Iraqis and negotiating a long-term presence -- that you feel that we are -- we've reached a point where the worst is behind us there?

HAGEL: Well, I think -- to put it in a very simplistic way -- it's not simplistic, but for this purpose and to answer your question, I would start with this response: We are where we are, and we're not going to go back and unwind every bad decision I think we've made -- and damn near every one of them has been the wrong decision. That's irrelevant. We are where we are.

Now, we have national interest in Iraq. We have national interest in the Middle East. We have national interest with our allies, and I mentioned oil earlier. Oil alone should not drive our foreign policy, but it is certainly part of the arc of the interests of this country and the world. If we want to see real revolution and Islamic radicals start to hold forth in a way that we have not quite envisioned, if you let this world economy go down in dangerous ways, the instability that that brings to the world, hence to us, is something we need to think about.

But to get back on the focus of your question, it seems to me, Richard, that as we look at Iraq, we are in a situation where we have today, almost at the end of our fifth year, more troops in Iraq today than we've ever had. We've had more American casualties in Iraq this year than we've ever had. We have more American troops in Afghanistan than we've ever had. We're at the peak of both, in our fifth and sixth years, and we're getting ready for our sixth and seventh years.

Now, what does that mean? What can we do to go forward? Well, I asked the question of General Petraeus and Ambassador Crocker at hearings in September regarding the surge -- "Give us more time" -- and I said, "More time for what? What is the purpose here?"

It's not a military tactical victory. I mean, we had most every military tactical victory in Vietnam, with the United States winning every tactical victory. We're winning every tactical victory in Iraq. But the point is to buy time toward some resolution, some political dynamic that can set in motion enough of the requirements for the Iraqi people to govern themselves, defend themselves, support themselves, and bring some stability to a society to let them start working it through. That supposedly is the objective.

Well, yes, our casualties are down. Yes, we've seen progress. But what's disconnected from that is where we go from here. You asked about General Lutz' point. I'm not sure that we're in a position ready to sign any kind of an agreement with Iraq. For example, there's no oil law. There's no de-Ba'athification law.

All the laws that we put at the front end on benchmarks -- and, by the way, those days are over when people say, at least in my opinion, some of my colleagues in the Congress, "Well, let's set up a new set of benchmarks." No, we've passed the benchmark point. We're in a whole different zone here.

And if we don't see some progress -- and even General Odierno and General Petraeus recently have said, in a very frustrated way, the military is doing their job. We never had enough troops, in my opinion, that went in there. Again, we're not going to go back and unwind that. But the military has done a magnificent job of achieving the objectives that we've asked them to do and more. But we've not seen that translate into any political progress, which in the end is all that counts.

So where we are going to go, Richard, with an agreement or some way to bring in status-of-forces agreements to replace the U.N. agreement, I don't know. I would hope in the next six months that we're in a position to do that. If we're not, then even some of my Republican colleagues in the Senate recently, in the last two days, who have been very forceful advocates of the so-called tactical military approach called surge and our involvement there, have started to unwind and say, "Well, if we don't see some political reconciliation here or progress by January or February," then even some of the strongest advocates of the war in Iraq are going to move in a little different direction. That may be, too, because of self-preservation, which is a powerful initiative.

HAASS: We're shocked to hear that. (Laughter.)

I know we are where we are, but I can't resist the temptation -- probably unwise, but I can't resist it -- to ask you, as you look back on Iraq, as it really gets to almost your philosophy of foreign policy, and you're writing a book about, in part, where this country should go, is the lesson of Iraq that we shouldn't have done it, that it constituted a form of overreach? Or is the lesson of Iraq it was okay to make the decision; we did it poorly?

HAGEL: I would add all those in subchapters as to what the lesson of Iraq is. But I think there's a bigger lesson, and that is, it should be very clear, after almost five years in Iraq, that it rolls back to a very clear dynamic. And Eisenhower, Truman, Marshall understood it, and that is, especially in a 21st century world, it's going to require a new 21st century frame of reference in our dealings with the great challenges of our time, where there's little margin of error. It's going to require a strengthening of alliances and relationships that we have never known before.

What has prevented a World War III or a nuclear holocaust, in my opinion, more than any one thing, is what Truman, Eisenhower and Marshall and others worked for after World War II -- building coalitions of common interest -- the United Nations, NATO, World Bank, IMF, dozens of multilateral banks and institutions. Why? Because they were focused on a common interest. This was not a zero-sum game. Alliances are absolutely critical.

And what we learned from Iraq is that you can't unilaterally, arbitrarily march into a country, invade a sovereign nation, regardless of the dynamics or the reasons or whatever you want to make as the primary focus on this, without alliances, the strength of those alliances.

If Barbara Tuchman were alive today, her fifth march of folly in her book, "The March of Folly," in my opinion, would be the invasion of Iraq. That's the lesson, it seems to me, that we'd better learn. And I think this administration is starting to understand that. I think you've seen a rather dramatic shift over the last 12 months, at least in what this administration is saying about foreign policy and saying about reaching out and saying about working with our allies. The world is far too combustible and complicated to do it any other way.

And the other factor here is we've got to recognize there is an historic diffusion of geopolitical economic power the world has never seen. Look at our dollar. Look at our economy. Look at energy. Look at oil. Everybody in this room is connected into that mainstream somehow, some way. Our country is. Our interests are.

And if we're going to be successful against radicalism and terrorism, where you start is what Jamie knows a little something about and others in this room, is networks of intelligence, seamless networks of intelligence, sharing and gathering with our allies, what we've been doing in northern Africa with many of those countries over the last five, six years. There's where the focus has to be. That, I hope, is what we've learned more than any one thing from our invasion of Iraq.

HAASS: I expect when we get to questions from our members, there will be lots of specific questions about Annapolis, about Pakistan and all that. So let me ask one or two more general ones before we come to some of those specifics. We just raised the altitude here. So let me stay at 36,000 feet.

To what extent ought the purpose of the United States be to concentrate on promoting democracy and on shaping the internal characteristics of other countries? To what extent ought that to be secondary, and, for example, in the case of Pakistan, where you ought to focus more on what they do with the security threat, or with Russia we ought to focus less on their movement away from democracy and more so on their policy towards Iran. We could go around the world.

But to what extent do you essentially buy the freedom agenda that has, at least rhetorically and at times substantively, informed the foreign policy of this administration?

HAGEL: Well, this country has always been a primary advocate of individual liberty, of democracy, freedom. We have not always practiced it in an absolute way in every regard. Less than 100 years ago, half the people in this room couldn't even vote in this country. That's one good example.

HAASS: Forty years ago, half the people in this room would not have been in this room. (Laughter.)

The point being that we are a democracy and a nation that has evolved, and we're still evolving. And great societies and democracies evolve. And we've got to be, it seems to me, very careful when we start judging countries and peoples and histories and cultures and traditions based on our standard, which is not perfect. It's better than, I think, any other in the world, but certainly not perfect.

You cannot coerce nations into democracy. You can't intimidate nations into democracy or force them into democracy or fight them into democracy. Every country in the world finds its own level of entry, its own center of gravity. We can help lead. We can work through alliances. We can use all the factors you just mentioned in our own interest. But we've always stood for what we believed and said was right.

Now, there's been a little duplicity in that occasionally in not just one administration but in every administration, and I think everyone figures that out. But it's a wise use of your power. It is working within frames of reference so that the human dimension -- the human dynamic -- is always part of whatever we advocate. I don't think it's good enough just to in your rhetorical flourishes -- in your great speeches about we're going to bring democracy to the world whether you want it or not -- for example, the president over the years talks about we're going to make Iraq the centerpiece of democracy in the Middle East. Democracies solve all the problems.

I've always wondered what King Abdullah thought of that in Saudi Arabia or King Abdullah in Jordan or all those other great democracies in the Middle East. (Laughter.) That's right. So it's something we've got to match our words with our actions, and part of why I think the view of America today is at an historic low is because the citizens of the world have found a disconnect with us. Now, great powers are always resented -- we understand that. We accept that. But it's something deeper than that and we haven't matched up our rhetoric and our actions here.

HAASS: My next question -- let me interrupt. But there's two way to match up -- two ways to match up your rhetoric with your actions. One is to raise up your actions to match your rhetoric. The other is to lower your rhetoric to match your actions. And the question of democracy promotion as the centerpiece of American foreign policy it represents I would actually think a fundamental choice for American foreign policy when we approach a Russia, a China, a Saudi Arabia, Pakistan. Should democracy-related considerations dominate or would you argue they could be part of it but we simply don't have the luxury to have that dominate?

HAGEL: I found at least in my life a long, long, time ago, Richard, that there are uncontrollables, and you are far better off to devote your energies, your time, your discipline, and your talents to the controllables in life. You factor in the uncontrollables but you can't control what's going on in Pakistan. We can't -- the United States, I don't think. We can't control -- if that was the case we would have bin Laden locked up and found a long time ago if that was that simple. We can't impose ourselves into the so-called Russian democracy -- whatever Putin is doing over there. Darfur is a very clear example -- one of the most horrendous terrible episodes in modern history. Here we are the most powerful nation on Earth with the most powerful economy, powerful army, powerful everything, and we're limited.

The great lessons of history for great powers has always been an understanding of great power's limitations. That doesn't mean you don't try to make a better world -- of course you do. But your question about how do you factor in democracy -- should that be the overwhelming issue -- well, if you want it to be that way okay, but you have to live with the results. What about the Palestinians? They had an election. Shocked Condi Rice on how it came out. Other elections that haven't turned out exactly the way we want.

But if that's the approach you're going to take then you must deal with the elected officials of Iran -- of the Palestinians -- whichever government you're going to deal with because then your option is if you don't you put yourself in a cul-de-sac. If you don't then you just disconnect, and I've never believed you make the world better by trying to isolate Iran or cutting off funds to Pakistan or doing all the other things that we've tried. You can do that. You can threaten. You can make wise choices as to where your aids go -- your relationships go. But all you do is you make a more dangerous world and you assure that you have absolutely no influence over the outcome in Iran or Pakistan if you do that. Tough decisions.

Many of you in this room have worked for Presidents Kennedy and Nixon and Reagan and others, and I remember listening at different times and speeches, books, what these presidents all said about foreign policy, and Ted Sorenson has written books on this. It's never a good easy clean choice in foreign policy. If it was then it'd be easy. Foreign policy is exactly what your question is about -- is about a range of options and ways to deal with those challenges within the framework of your policy, and it seems to me -- and I'll end it with this -- that you cannot have a policy on any country on -- any challenge on any issue unless there's a strategic component to it. You cannot ricochet from crisis to crisis, and I think that's essentially what we've been doing the last few years.

HAASS: Let me raise one other subject before we open it up. It's a subject you've been close to which is energy issues and climate change, and I guess I'll have a double barreled question which is what are we likely to see out of the Congress on energy, and what is it you would like to see which might be different on energy and climate change? Where would you like to see those issues go?

HAGEL: Richard, I've been involved in both of those issues since I've been in the Senate the last 11 years, and I have never believed that you can take energy or the environment and deal with them as separate components. There's a third E I would put in that, and that's the economy. Any discussion -- any policy -- any strategic thinking about the environment or energy has to include the economy, and they are in fact woven into one fabric because whatever you're going to do on national policy or Governor Schwarzenegger's policy in California or state policy on the environment it's going to affect energy consumption. It's going to affect every dynamic of energy, and it's certainly going to affect your economy.

One of the breakdowns that I -- at least I've seen in the Senate and before that when I was in business and traveled around the world on environment is that -- on the environment is that we so separated the so-called environmentalists from the energy companies -- those predominantly concerned about the economy. So we had these two groups coming at each other. Well, we've got to deal with both of them and you have to deal with both of them at the same time. So your question, "So what? That's interesting, Chuck, but what does that mean?" Well, obviously the environment is critical to all of us. There are no boundaries, there are no borders, and we have to deal with it, and we have to have -- frame some general national policy that includes many factors.

Start with transportation. I suspect everybody in this room knows that of the more than 20 million barrels of oil America consumes every day more than half that goes to transportation. So I've never believed that you could get -- come close to getting your arms around the environment until you deal with the transportation piece that sucks so much of the oil consumption out of our society. That means, it seems to me, a wider deeper portfolio of energy -- renewables certainly. Nuclear, I think, is -- and I'm more and more astounded why we do not -- are incapable -- I know why, but how we are so shortsighted that we allow that form of energy to get put aside. Obviously technology is going to drive a tremendous amount of this. Conservation -- we've got to be far smarter and we're doing better.

HAASS: What about CAFE standards?

HAGEL: CAFE standards -- that's part of it, yes, absolutely, and we're doing more of that in the Senate -- all the things that frame up a wise environmental policy and it has to be international. We know that greenhouse gas emissions -- Chinese have now overtaken us or will soon within the next probably 12 months as the largest manmade greenhouse gas emissions country in the world. So it has to be a program, yes, that focuses on us -- what we can do. But we've got to bring an alliance together -- a comprehensive alliance -- that makes sense to the world body, take the lead, and there are going to be variations of that. But if we don't do that then what we're going to see is these great emerging economies -- I mentioned China, India, that go across the board -- they will go to where their resources are strongest. So would America -- so have we.

What does that mean? Coal. Oil. Fossil fuels. More emissions into the air, because the Chinese say -- and I've met with them and the Indians and others -- we've got countries with over a billion people. We've got to find jobs for our people. We've got to bring a standard of living back up. That's important to us for our markets, but it's more important to the United States and the world for stability. So that's a good example of balancing the economy and the environment.

Now what are we going to do in the Congress? You know that we will -- this year we've used -- in the committee hearings in the Senate to tee up some legislation which I think we will get through the Environmental Committee and probably next year in the second session of Congress. The House has passed some bills. How tough those are going to be -- I mean, cap-and- trade is in some of that. There are a lot of new variations but I -- my main point here -- and this -- I'll end my answer this way -- it seems to me we have to be wise and that we've got to factor in the larger framework of all of these dynamics. There's not one easy, quick answer here. But it is going to require all the pieces.

HAASS: With that -- I've got more questions but I will show uncommon restraint and not raise them. Instead, let's open it to the members in the room.

And just wait -- let me see a hand and wait for a microphone, and limit yourself to question, short as it and succinct as it can be. I will be forever grateful.

We'll start with Rita Hauser. Wait for a microphone, Rita.

QUESTIONER: Chuck, I'm tempted to ask you about Palestine and all that, but I'm going to go to a different question.

Lots of people in this room admire you because you were willing to reach across the aisle, break with your party, you sponsored with Biden the first attempt to deal with the Iraq War. Do you believe that bipartisanship will return on the question of foreign policy with a new administration or do you share the view that various scholars have put forth that we are now, perhaps for the long term, a red country and blue country and that there's no way that you can bridge that gap?

HAGEL: I think that this country is faced -- the world is faced with such great challenges that the next president of the United States, regardless of who it is, is going to understand clearly that in order to govern, it's going to require consensus. That means not treating the Congress like an appendage -- like a nuisance. And we have allowed ourselves to be put in that position, quite frankly, for a lot of different reasons. The next president -- I certainly hope and believe, but I think, in fact, the reality will dictate -- will have to reach out to a bipartisan consensus not only in foreign policy, but everything.

When you look across the horizon and the scope of the challenges facing this country -- well, let's just take some more closer to home parochial issues, which many of you are dealing every day. Take entitlement programs. I don't think there's any -- a person in this room that does not understand the seriousness of what's ahead here. Obviously, the complications of what's been transpiring in our economy the last six months -- the subprime mortgage fiasco and how deep that's going to go. But the ripple effect -- I think it shocked a lot of people. It hasn't shocked, not because I'm any smarter than anybody, but it's because we're in interconnected world. When I say ripple effect, what that's done to banks -- financial institutions all over the world -- closed down banks. They had runs on banks in London over this and it isn't over.

So the point being, to answer your question, this next president will reach out for consensus. I think the next president, regardless of who it is, will make a very conscious effort to put a Cabinet together that is bipartisan. I think the Republican and Democrat consensus is -- there'll be enough of that consensus to govern. The president will have to do that. He doesn't -- he or she -- won't have a choice. This is not a luxury to govern unilaterally, arbitrarily or "Let's set the Constitution aside and put Article I of the Constitution aside for right now. I am in charge." Yes, we need a strong presidency. I absolutely agree with that.

But it has to go deeper and wider than that, and I'm rather hopeful because I think history is rather replete with examples of when things get to that critical mass -- and I think they're damn -- they're here now -- and just one question that if you pay attention to in any poll, it's been consistent the last year. The question of "Is America going in the right direction or the wrong direction?" Seventy to 75 percent of Americans all say consistently, across the board, regardless of poll, America's going in the wrong direction. Now that should tell all of us in this business things aren't that good.

When 75 percent of Americans -- not just Republicans or Democrats or independents, all Americans -- and then you can take that down into subdivisions of that question, that tells me if the next president has any hope of governing this country, that president is going to have to bring a consensus of governance together of common purpose govern -- of common interest and certainly there is nothing more immediate or important than foreign policy because that houses the most vital interest of this country, starting with national security.

HAASS: For the record, I also want to say the senator's wearing a blue tie as a statement of his outreach. (Laughter.)

QUESTIONER: As a student of history -- let me ask this in a provocative way -- can you name a less effective Republican administration -- (laughter) -- since Herbert Hoover and will this one have a comparable effect on your party as Hoover's did in the next generation? (Laughter.)

HAGEL: Well -- (laughter) -- you've not failed us, Bob. (Laughter.) I would say that history will make that determination as to -- (boos) -- I'm not finished. I'll give you -- I'm going to give you my -- (laughter) -- people looking for red meat here.

I'll give you my personal opinion. I know I'm not known for that, but -- (laughter) -- that's why I'm so highly regarded at the White House. History will make that determination, as you know, Bob, more than almost anyone. And I'll leave that to history as to its determination. As to my personal opinion, which I have not been shy about sharing, I think as most of you know in speeches or interviews, this administration in my opinion has been as unprepared as any administration I'm aware of, not only the ones that I have been somehow connected to and that's been every administration -- either I've been in Washington or worked within an administration or Congress or some way dealing with them since the first Nixon administration. I would rate this one the lowest in capacity, in capability, in policy, in consensus -- almost every area, I would give it the lowest grade.

And I've thought often, Bob -- I may be wrong on this -- why is that, if I'm anywhere near the bulls-eye? And I have to say -- this is my opinion -- it is my opinion that this is one of the most arrogant, incompetent administrations I've ever seen personally or ever read about. (Laughter.) And when you think of the time and the opportunities that have been squandered by this administration, that's how you judge -- you all know about this, especially those of you in financial services, but anybody who does anything with time.

Time is the most critical commodity you have. If you squander the time, if you squander the moment, if you squander the opportunity, if you squander the boldness, what price do you pay on that? At what cost does that happen? And you know, I think of this administration, what they could have done after 9/11, what was within their grasp. Every poll in the world showed 90 percent of the world for us. Iran had some of the first spontaneous demonstrations on the streets of Tehran supporting America. They squandered a tremendous amount of opportunity.

Now, it will come back. I have enough confidence in our country and in the next set of leaders that will lead. It will come back.

There's where they have failed the country. They've squandered the time and the opportunity that they had, and the next president is going to take four years to not only dig out from under that, but I also would put this caveat on it, and it goes back a little bit to Rita's question: I think this next president is going to have more opportunity to turn things around than almost any president in modern history. And why is that? Because I do believe the confluence of events, the critical mass is here, and if the next president is wise enough, this country will follow a consensus president, a wise president because they want to. The world will follow an America that they want to believe in. Most nations of the world, the leaders and people know that the world is more dangerous when America doesn't lead through wise, consensus leadership. I'm told that by every leader I talk to. They have their problems with us. They all think we're arrogant, whatever it is. But when America is weak, when America is not leading, the world is very dangerous.

And I mentioned earlier, Bob, we are now living in a world where there's little margin of error, whether it's weapons of mass destruction; Internet's changed everything; all the dynamics that are out there.

And I've used Eisenhower a couple of times as an example: I think Dwight Eisenhower -- and I think history's starting to reflect this -- was one of the wisest, best president's we ever had. People, through the last 25 years as they've judged his administration -- "He played too much golf and he was lazy and he wasn't on this maniacal 24-hour day giving speeches and" -- there was a reason for that, I suspect. He was thinking. (Laughter.) He was actually thinking about the big issues facing the world, and he was sitting out somewhere -- and you think of all the things that happened in those eight years, but more importantly, think of all the things that didn't happen. Think of all the crises that he could have gotten us into: the Suez crisis; he could have sent troops into Vietnam when the French begged him to do it in 1953-'54. You go through history of those eight years -- Eisenhower did it right. Nobody's perfect, but he understood consensus. He understood how to govern.

I think that's the model administration, if there is one. And every administration's different. The world's different. Challenges are different.

Now, that's a little far afield from your question, but I think it's only fair to also respond in a way that says, "Well, what do you think, Chuck, is a good administration?" or "What do you think is a model administration in dealing with these great issues?"

QUESTIONER: How can your party recover?

HAGEL: I don't know what next year brings. If you look at the trend lines, they don't look very good for my party. I think the political currents are running as swiftly and deeply and unpredictably as they have in modern history -- maybe ever. What that produces is uncertain. It could produce a very viable third-party candidate for president -- and I'm serious about that, if for no other reason than the majority of registered voters in this country are independents.

HAASS: Plurality.

HAGEL: I mean, not a majority; a plurality -- not Republicans or Democrats.

And so right now if you're betting -- nobody in this room is involved in betting, in hedge funds or anything like that -- (laughter) --

HAASS: We call it "investing" here in New York. (Laughter.) (Inaudible.)

HAGEL: I'm from the prairie, you know. (Laughter.)

HAASS: You're talking to my face here. (Laughter.)

HAGEL: I just want to find a new football coach. That's all I -- (laughter) -- and a few linebackers, while I'm at it up here.

But I think that the political currents and trends are not good for the Republican Party. And so if those trends play out, which is likely, that means Republicans lose the White House, the Democrats add to their numbers in the governorships, the House and the Senate, which I think is likely. I'm not willing to say that's definitely going to happen because we've got another almost 12 months to go. A lot can happen within that timeframe. But the trend lines are not good.

So if the Republican Party experiences one of the great political defeats of our time, it will build back. We happened to have seen that in 1964 in my party, and we built back. We saw these great shifts.

And politics, Bob -- and so many of you know this and have written about this -- politics just reflects society. Politics reflects our times. We respond and we react to where we come from and who we are. In many ways I'm no different from the people that send me here. And so we respond to that, and we will adjust and we'll accommodate and we will find the leadership and the politics required to do what we must do to lead a great country. And politics is the one vehicle that produces that, and that's the highway we use to get there.

HAASS: We've got about 4,000 hands in the room and not much time left.

In the back, yes, ma'am?

QUESTIONER: Hi. My name is Nancy Lieberman. Is there any Republican candidate for president or former Republican potential candidate for president which has a foreign policy consistent -- philosophy consistent with your own or even close to your own?

HAGEL: Well, to be fair to these candidates, they've been put in these awkward formats. It's kind of like the poor man's Gong Show. (Laughter.) And I would far prefer -- and I think most Americans if you're interested -- to give each candidate five minutes and say, "Okay, Senator or Governor, Congressman, tell us what your foreign policy is and would be for the next four years." Take any dimension of that or, "What is your policy regarding America's competitive role in the world, our declining dollar? Should we intervene? Should we not intervene? How do you stop that? How can you stop it?" And so on and so on.

Whether these glancing blows, smart-ass, kind of glib answers that a bunch of wise-ass consultants get together and they put in the minds of all these candidates -- "Now, you want to get this one in. This will be a zinger on old Mitt. Wait until he gets that one." (Laughter.) You know, and, "Here's a good one for Rudy. You know, ask him about all the wives," and so on. (Laughter.)

I mean -- and so America and the world is sitting out there -- "Well, I don't know. Does that have anything to do with what the next set of challenges are?"

And so I -- to your question about who is in my opinion closest to my foreign policy, John McCain is the only one that I -- of the candidates that I've worked closely with -- of the Republicans. Now, Joe Biden -- I'm very close to Joe Biden's philosophy about foreign policy. I suppose of all the candidates out there, including McCain, I'm probably closer to Joe Biden's. And I think Biden would be a very good president. I think Joe Biden would be a very good secretary of State.

QUESTIONER: (Off mike.)

HAGEL: He would be a very good secretary of State in any administration. (Laughter.)

But they haven't had a chance, most of them, to articulate the depth of a philosophy about foreign policy.

And on the Democratic side, the media just pays attention to three candidates: Hillary and Obama and Edwards. And so guys like Biden and Dodd, who actually have something to say -- not that the other three don't, but these two, for example -- Richardson. I mean, look at the experiences of Governor Richardson on foreign policy, for example, or anything -- but those guys get shoved off into the background and they're lucky to get 30 seconds of anything.

So I can't control that, you can't either, but it's unfair to the country. It's unfair to those candidates not to give them an opportunity to answer your question.

HAASS: Let me give one or two other people the opportunity then to ask a question.

Yes, ma'am.

QUESTIONER: Ingar Eliot (sp). Speaking about control, what are your thoughts about two political families -- the Bushes and the Clintons, dominating our political lives for perhaps half a century?

(Laughter.)

HAGEL: Well, that's up to the voters, actually. I've always been of the opinion that we're a nation that allows people to ascend to great heights -- go as far as you can go based on your hard work, and your initiative, and your talent, your capacity. And if that means we have Bushes and Clintons as far as the eyes can see -- I mean, I can't control that, that's up to the people of the United States.

I don't think that they should necessarily be penalized either. I don't think Hillary Clinton, for example, should be necessarily penalized because her husband was president for eight years. She's in the Senate and we've had our -- we've had our belly full of Clintons, and that's it. We've tried the dynasty thing with Bush and it didn't work. So let's -- we're not going to try with Clinton.

(Laughter.)

I mean -- I think you should judge your candidates based on each of them individually. If the American people decide to elect Hillary Clinton, they elect Hillary Clinton. She's -- she's certainly capable.

HAASS: Sir.

QUESTIONER: Thank you. Allan Blinken, The Washington Center. Two assumptions, Senator: One assumption is a Democratic candidate wins the presidency next year; the other assumption is there isn't a Hagel-Bloomberg independent ticket. (Laughter.) It's an assumption.

HAGEL: But thank you. I appreciate that. A lonely Senator is getting a little recognition. (Laughter.)

QUESTIONER: A very simple question, would you accept a position in a Democratic administration?

HAGEL: I would consider a serious offer in any administration if it comes from a serious president who wants to do something to make our world better and our country stronger. (Applause.)

HAASS: Does anyone have a foreign policy question? (Laughter.)

HAASS: I would remind you, this is the Council on Foreign Relations -- (laughter) -- not the council --

HAGEL: This is Richard Haass, by the way -- (inaudible) --

(Laughter.)

HAASS: Mr. Sorensen (sp), I'm counting on you.

QUESTIONER: First, I'm happy to say, on the record, what I have said many times to Senator Hagel privately, which is that his speeches on foreign policy, on the Senate floor and off, make me very proud to be a Nebraskan. (Applause.)

QUESTIONER: My question is, that given the serious foreign policy situation in which this country finds itself, would you be willing to take your philosophy of a consensus administration, and a bipartisan cabinet far enough to accept second place on the ticket of the Democratic nominee?

HAGEL: Was that a foreign policy question? (Laughter.)

HAASS: You can see how little influence I have. (Laughter.) Painful -- painfully true.

HAGEL: Sorensen (sp) gets a break. He's a Nebraskan so, you know, you have to -- and a very smart one too, he's in every hall of fame there is in Nebraska. I think -- I think even women's volleyball, I think he's in that hall. (Laughter.) But he's made all of them, and we're very proud of Ted Sorensen (sp) and his family. And his brother -- if any of you know that his brother was a lieutenant governor, and has a long tradition of public service to our country and our state.

Have I answered the question? Is that -- (laughter.)

HAASS: I think you've answered the -- (inaudible) -- It works for me. (Laughter.)

HAGEL: My normal answer to that would be I don't answer hypotheticals. And I did say, however, that I think this is one of those unique years. That anything's possible, and I do, in politics. I don't think that question is going to be posed to me, so I probably wouldn't have to worry about it.

But I would give you, Ted, the same answer that I gave when asked about would I entertain going into an administration of another party. If there was an area that I thought I could make a difference and influence policy, leadership, outcome -- and you mentioned a couple of what I mentioned here today, consensus governance in foreign policy -- then I would entertain these kinds of serious questions. Again, I don't think that's going to be anything I need to worry too much about.

But we're living through this remarkable time in history that, like all remarkable transformational times, everything's possible. And I think if Americans always believe that everything's possible -- and the world believes that America believes that, and the world believes America can change things for the better, then we're always going to be okay. And I know that's a little Hallmark card philosophical part of the question, but it comes with my answer and it's in my gut.

HAASS: Okay -- all the way in the back. Yes, sir. I don't have my glasses -- is that Allen (sp)? I don't have my glasses on, I can't see this far.

QUESTIONER: Yeah, Allen Gersun (sp). Senator, could you comment on the administration's approach to dealing with the Arab-Israeli issue?

HAGEL: Sure.

QUESTIONER: Thank you.

HAASS: Give your take on Annapolis.

HAGEL: I had an opportunity to spend some time with Prime Minister Olmert on Monday afternoon. About four of us were asked to come talk with him after he met with the president. He laid out his agenda, what his objective were, what he thought was possible.

He was hopeful. He was even moderately enthusiastic but very, very much aware of the realities of what's ahead and what it would require to advance any dimension of this problem. And he was very careful to keep expectations tamped down -- and you all know, many of you have run these kind of shows, Gary Sick's (sp) out there, or other foreign policy pros, their whole life's been involved in this.

I would start answering your question by saying this: I think it is better that we had Annapolis yesterday than not having it, because I think it did, at the very least, present a format, a forum, an opportunity to bring some critical countries around a table at the same time. And I think that's always valuable if it's framed in the right context, with the right amount of expectation.

So I start there. So I think, from that perspective, it was helpful. Like everything in life, though, it's always what happens next, and where do we go from here. Are we going to build on this -- more than a photo op, or just an excuse to say, well, I did what I could do, it's up to you guys. I mean, that's essentially been this administration's approach to the Israeli-Palestinian issues of the last seven years.

And President Bush made it quite clear -- in fact, he almost caustically derided Bill Clinton -- and Clinton's personal commitment, and involvement, and investment, which came close to leading to something, as you all know, in December of 2000 -- in January, 2001.

And by the way -- just one of those accidents of history, I happened to be part of that, by accident, that I was in the Middle East, and Israel, and Syria and Jordan at the time, in 2000, when the Supreme Court came down with its decision that Mr. Gore was going to -- was going to eventually wind up with a Nobel Peace Prize, not the presidency.

And I recall leaving my hotel room -- the Sheraton Hotel in Damascus, on my way to Israel. And the phone rang, and I went back in the room and it was Colin Powell telling me that Bush was the new president. He was going to be the secretary of State. And he knew, Powell knew, because I had talked to him, that I was on my way to Israel, and would I mind being a bit of an interface, at least kind of his player there, while Prime Minister Barak and Richard's friend, many of your colleagues, friend, Martin Indyk, and others were trying to bring these last pieces together. And Powell made it very clear to me that he nor the president-elect wanted to get in the middle of that and didn't want to do anything to inhibit that or intimidate that.

Now, the reason I bring that up, in answering your question, is that I was very disappointed, after this president and his administration took office -- and, by the way, as far as I know, and I know a little something about it beyond 2001, Powell was the only one that pushed the other way -- and Richard, of course, was there with Secretary Powell through part of that -- on re-engaging with the Palestinians on this issue.

And President Bush decided that wasn't the course he wanted to take. And so, therefore -- and I go back to part my answer back to Bob Kaiser -- this administration, I think, squandered seven years and let things get worse. And I think they have festered, and I think the Middle East is more dangerous, more combustible today than it's maybe ever been.

And partly, I think, that's because we can't impose peace. We know that. But we let it drift. We let it drift. I think Iran is stronger today. They're more intimidating today; the Syrian problem, the Lebanese problem. I don't blame it all on Bush. Bush was limited in what he could do. But I do say that we could have taken that a different direction. And so we get to the current situation and your question about yesterday.

The answer, I think, really depends on "Okay, then what happens now?" Do, in fact, we start to bolt these pieces together to get us to where the Palestinians, the Israelis and the United States have now agreed to be, by the end of next year, with the other players -- and they will be players, have to be players -- at the table, and then how do we do that?

Is the president going to be personally committed and involved to do that? Is Rice going to be committed to do that? Now, if you read Maureen Dowd's column today, she takes a little different approach there. She has a little different take on the objectives, and that is, "What do you mean, Iraq? I thought that was over. No, my legacy is the Israeli-Palestinian thing."

Well, as you all know who have been in this business a long time, longer than I have, you've got to juggle a lot of interests -- Afghanistan, the Middle East, Iraq, Iran, Pakistan, Russia, Kosovo. We haven't hit that bump in the road yet. We will on December 10th. And I think that's why Secretary Gates says, "No, I'm not going to follow Secretary Rumsfeld's ideas about we're going to pull more troops out of Europe." Gates countermanded that, and I think Gates was right.

But that would be my general answer. I know it's kind of all over the place, but I think it includes all those pieces that I have responded to your question with. Overall, I'd say it was important to do. Overall I'm glad he did it; probably a few years too late. But we'll see. Let's see.

We have to be hopeful. It's in our interest. We have to push and do everything we can to try to bring this up onto some high ground so that the Palestinians, the Arab world, will start to develop some new confidence in our leadership, that, in fact, we are going to address this; we are going to get to what everybody says they believe is the answer, and that's a two-state solution.

And I asked the prime minister on Monday; I said, "Prime Minister, how much latitude do you believe you have within your own cabinet, within your own coalition government, within your own political environment in Israel, to make some of the tough decisions you're going to have to make?" And he's on not particularly solid footing, as you all know, politically in Israel. And he said, "I recognize that, Senator. I recognize that it's going to take some bold decision-making." Well, we'll see.

I think we're fortunate on the Palestinian side to have the two most significant, most moderate, most intelligent, most comprehensive leaders representing the Palestinians we've ever had in Fayyad, who's the new prime minister, and Abbas, the president. Can they bring enough consensus together, not just within the Palestinian population but within the Arab world, that they're going to need to move this? Those are the real issues that have to come next.

HAASS: With that, I'm going to make a bold decision, which is, alas, it's 2:00. We didn't get to Kosovo. We didn't get to China and a few other things. So that leads me to think that since you've got about 14 months left in the Senate, give or take, I hope we will get you back here at least one more time so we can get to the questions we didn't.

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THIS IS A RUSH TRANSCRIPT.

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RICHARD N. HAASS: Why don't we get started?

Good afternoon. Welcome to the Council on Foreign Relations. Let me repeat our favorite mantra, to please turn off anything electrical other than a hearing aid.

Today's meeting is on the record. And let me also add that council members around the country and around the world are participating via teleconference.

We, as you know, have with us today the senior senator from the great state of Nebraska, a state that this institution bears more than a few connections to. I see Mr. Sorensen here, and Mr. Petersen has been known to claim heritage in Nebraska.

Before that he was a successful businessman. He had an impressive and courageous stint in Vietnam. As I said, he's now been in the Senate for, what, 11 years?

SENATOR CHUCK HAGEL: Yes.

HAASS: Eleven years, and is about -- his penultimate year; next year will be his last year in the Senate, out of choice.

And two other things I would say -- one is, like many of us he is an aspiring author, and in March of 2008 his book will appear: "America, the Next Chapter." And most important, next to the book, is that he's a member of the Council on Foreign Relations.

Chuck, you recently gave a speech on Iran that attracted a lot of attention in its calls for dialogue. Not everyone here necessarily had the chance to read the speech; some are simply waiting for the movie. (Laughter.) And if you had the ear of the president today, what would you tell him to do on Iran?

HAGEL: Richard, thank you for an opportunity to be with you today and with your members.

I sent President Bush a letter in October laying out what I thought might be helpful for him to consider in a strategic policy with Iran. And I said in that letter that I have believed for some time that, whether we're talking about Iran or Iraq or the episode that took place in Annapolis yesterday -- the Israeli-Palestinian issue -- it would require a regional strategic context. And I've never believed that you can take Iran and deal with that issue in a vacuum tube. There are too many intersecting, connecting dynamics in the Middle East, and they are all integrated and woven into one fabric. Each is a little different, obviously.

So in the letter -- to answer your question -- I sent to the president, I suggested he consider direct, unconditional, comprehensive bilateral talks, discussions -- not negotiations -- with Iran. I thought that as I made my case for that that it was particularly important that he seize the high ground that I believe is developing in the Middle East -- and we saw some indication of that yesterday, which we'll probably talk more directly about here in a few minutes. But there's a confluence of events that are taking place that give the United States and the world and the regional powers in the Middle East an opportunity with an open window that won't be there, I don't believe, for a long time -- an opportunity to seize the initiative and through a direct, comprehensive, unconditional dialogue, bilateral talk, something with Iran -- it seems to me that would be a good start.

The other point I made on this -- just quickly -- is if we don't do that, if we don't seize the moment then the status quo is not on the side of Israel, it is not on the side of the United States, it is not on the side of any of our interests. If you want to just take -- 60 percent of the oil reserves in the world are right there in that region, if you want to be mercenary about it but realistic about it. I mean, that should be interest enough that would govern our interest. So if we don't seize the moment with some initiative, then I fear we are going to unwind even further.

HAASS: Why is it -- you used the word "dialogue" twice and you've specifically precluded negotiations. If you're going to send your secretary of State or someone to Tehran or you meet in Geneva, why not have a comprehensive negotiation?

HAGEL: Well, I'm not sure you can negotiate at the front end of anything without some preliminary agenda-setting, some preliminary understanding of what each side wants to accomplish.

HAASS: Okay. You're not ruling it out. You just want to --

HAGEL: No, I would hope -- I would hope that we would get to that point. But it's why I always say when we talk about Iraq and political reconciliation, which we've seen none of in Iraq -- accommodation. Political accommodation seems to me has to come before reconciliation, and that's the same principle I would apply to Iran.

HAASS: And in principle -- one last question on Iran -- would you be willing to put on the table not simply the threat of increased sanctions but also the promise of incentives -- for example, dropping economic sanctions, security assurances, ending U.S. declaratory, say, support for regime change? Could you imagine all that as part of the mix?

HAGEL: Sure. I think it has to. And that's what I mean when I say "unconditional."

I mean, I never understood how the greatest power on Earth, who prides itself in diplomatic achievements and world leadership in every area, every arena, every discipline -- and yet we are afraid to talk with someone or we apply preconditions like it's a great privilege to talk to the United States. That's not diplomacy. That's not what diplomacy is about. And you don't talk to your friends -- your friends usually don't give you the problems. Some friends do -- (laughter) -- but you have none of those, Richard. But you --

HAASS: Problems or friends? (Laughter.)

HAGEL: You take the entire set and subset of these challenges that are part of how you use and why you use diplomacy, and included in that entire universe and arsenal are the economic powers, the military powers, the alliance powers and relationships, certainly diplomatic powers, and you apply those in a wise way with a clear objective.

HAASS: You mentioned two other subjects, so let me follow up. One was Iraq. You've been quite critical over the years over in particular how the policy was carried out. Is it your sense, though, that we've now reached a point where -- with the surge, with the talk now that Dave Lute (sp) mentioned the other day of sitting down with the Iraqis and negotiating a long-term presence -- that you feel that we are -- we've reached a point where the worst is behind us there?

HAGEL: Well, I think -- to put it in a very simplistic way -- it's not simplistic, but for this purpose and to answer your question, I would start with this response: We are where we are, and we're not going to go back and unwind every bad decision I think we've made -- and damn near every one of them has been the wrong decision. That's irrelevant. We are where we are.

Now, we have national interest in Iraq. We have national interest in the Middle East. We have national interest with our allies, and I mentioned oil earlier. Oil alone should not drive our foreign policy, but it is certainly part of the arc of the interests of this country and the world. If we want to see real revolution and Islamic radicals start to hold forth in a way that we have not quite envisioned, if you let this world economy go down in dangerous ways, the instability that that brings to the world, hence to us, is something we need to think about.

But to get back on the focus of your question, it seems to me, Richard, that as we look at Iraq, we are in a situation where we have today, almost at the end of our fifth year, more troops in Iraq today than we've ever had. We've had more American casualties in Iraq this year than we've ever had. We have more American troops in Afghanistan than we've ever had. We're at the peak of both, in our fifth and sixth years, and we're getting ready for our sixth and seventh years.

Now, what does that mean? What can we do to go forward? Well, I asked the question of General Petraeus and Ambassador Crocker at hearings in September regarding the surge -- "Give us more time" -- and I said, "More time for what? What is the purpose here?"

It's not a military tactical victory. I mean, we had most every military tactical victory in Vietnam, with the United States winning every tactical victory. We're winning every tactical victory in Iraq. But the point is to buy time toward some resolution, some political dynamic that can set in motion enough of the requirements for the Iraqi people to govern themselves, defend themselves, support themselves, and bring some stability to a society to let them start working it through. That supposedly is the objective.

Well, yes, our casualties are down. Yes, we've seen progress. But what's disconnected from that is where we go from here. You asked about General Lutz' point. I'm not sure that we're in a position ready to sign any kind of an agreement with Iraq. For example, there's no oil law. There's no de-Ba'athification law.

All the laws that we put at the front end on benchmarks -- and, by the way, those days are over when people say, at least in my opinion, some of my colleagues in the Congress, "Well, let's set up a new set of benchmarks." No, we've passed the benchmark point. We're in a whole different zone here.

And if we don't see some progress -- and even General Odierno and General Petraeus recently have said, in a very frustrated way, the military is doing their job. We never had enough troops, in my opinion, that went in there. Again, we're not going to go back and unwind that. But the military has done a magnificent job of achieving the objectives that we've asked them to do and more. But we've not seen that translate into any political progress, which in the end is all that counts.

So where we are going to go, Richard, with an agreement or some way to bring in status-of-forces agreements to replace the U.N. agreement, I don't know. I would hope in the next six months that we're in a position to do that. If we're not, then even some of my Republican colleagues in the Senate recently, in the last two days, who have been very forceful advocates of the so-called tactical military approach called surge and our involvement there, have started to unwind and say, "Well, if we don't see some political reconciliation here or progress by January or February," then even some of the strongest advocates of the war in Iraq are going to move in a little different direction. That may be, too, because of self-preservation, which is a powerful initiative.

HAASS: We're shocked to hear that. (Laughter.)

I know we are where we are, but I can't resist the temptation -- probably unwise, but I can't resist it -- to ask you, as you look back on Iraq, as it really gets to almost your philosophy of foreign policy, and you're writing a book about, in part, where this country should go, is the lesson of Iraq that we shouldn't have done it, that it constituted a form of overreach? Or is the lesson of Iraq it was okay to make the decision; we did it poorly?

HAGEL: I would add all those in subchapters as to what the lesson of Iraq is. But I think there's a bigger lesson, and that is, it should be very clear, after almost five years in Iraq, that it rolls back to a very clear dynamic. And Eisenhower, Truman, Marshall understood it, and that is, especially in a 21st century world, it's going to require a new 21st century frame of reference in our dealings with the great challenges of our time, where there's little margin of error. It's going to require a strengthening of alliances and relationships that we have never known before.

What has prevented a World War III or a nuclear holocaust, in my opinion, more than any one thing, is what Truman, Eisenhower and Marshall and others worked for after World War II -- building coalitions of common interest -- the United Nations, NATO, World Bank, IMF, dozens of multilateral banks and institutions. Why? Because they were focused on a common interest. This was not a zero-sum game. Alliances are absolutely critical.

And what we learned from Iraq is that you can't unilaterally, arbitrarily march into a country, invade a sovereign nation, regardless of the dynamics or the reasons or whatever you want to make as the primary focus on this, without alliances, the strength of those alliances.

If Barbara Tuchman were alive today, her fifth march of folly in her book, "The March of Folly," in my opinion, would be the invasion of Iraq. That's the lesson, it seems to me, that we'd better learn. And I think this administration is starting to understand that. I think you've seen a rather dramatic shift over the last 12 months, at least in what this administration is saying about foreign policy and saying about reaching out and saying about working with our allies. The world is far too combustible and complicated to do it any other way.

And the other factor here is we've got to recognize there is an historic diffusion of geopolitical economic power the world has never seen. Look at our dollar. Look at our economy. Look at energy. Look at oil. Everybody in this room is connected into that mainstream somehow, some way. Our country is. Our interests are.

And if we're going to be successful against radicalism and terrorism, where you start is what Jamie knows a little something about and others in this room, is networks of intelligence, seamless networks of intelligence, sharing and gathering with our allies, what we've been doing in northern Africa with many of those countries over the last five, six years. There's where the focus has to be. That, I hope, is what we've learned more than any one thing from our invasion of Iraq.

HAASS: I expect when we get to questions from our members, there will be lots of specific questions about Annapolis, about Pakistan and all that. So let me ask one or two more general ones before we come to some of those specifics. We just raised the altitude here. So let me stay at 36,000 feet.

To what extent ought the purpose of the United States be to concentrate on promoting democracy and on shaping the internal characteristics of other countries? To what extent ought that to be secondary, and, for example, in the case of Pakistan, where you ought to focus more on what they do with the security threat, or with Russia we ought to focus less on their movement away from democracy and more so on their policy towards Iran. We could go around the world.

But to what extent do you essentially buy the freedom agenda that has, at least rhetorically and at times substantively, informed the foreign policy of this administration?

HAGEL: Well, this country has always been a primary advocate of individual liberty, of democracy, freedom. We have not always practiced it in an absolute way in every regard. Less than 100 years ago, half the people in this room couldn't even vote in this country. That's one good example.

HAASS: Forty years ago, half the people in this room would not have been in this room. (Laughter.)

The point being that we are a democracy and a nation that has evolved, and we're still evolving. And great societies and democracies evolve. And we've got to be, it seems to me, very careful when we start judging countries and peoples and histories and cultures and traditions based on our standard, which is not perfect. It's better than, I think, any other in the world, but certainly not perfect.

You cannot coerce nations into democracy. You can't intimidate nations into democracy or force them into democracy or fight them into democracy. Every country in the world finds its own level of entry, its own center of gravity. We can help lead. We can work through alliances. We can use all the factors you just mentioned in our own interest. But we've always stood for what we believed and said was right.

Now, there's been a little duplicity in that occasionally in not just one administration but in every administration, and I think everyone figures that out. But it's a wise use of your power. It is working within frames of reference so that the human dimension -- the human dynamic -- is always part of whatever we advocate. I don't think it's good enough just to in your rhetorical flourishes -- in your great speeches about we're going to bring democracy to the world whether you want it or not -- for example, the president over the years talks about we're going to make Iraq the centerpiece of democracy in the Middle East. Democracies solve all the problems.

I've always wondered what King Abdullah thought of that in Saudi Arabia or King Abdullah in Jordan or all those other great democracies in the Middle East. (Laughter.) That's right. So it's something we've got to match our words with our actions, and part of why I think the view of America today is at an historic low is because the citizens of the world have found a disconnect with us. Now, great powers are always resented -- we understand that. We accept that. But it's something deeper than that and we haven't matched up our rhetoric and our actions here.

HAASS: My next question -- let me interrupt. But there's two way to match up -- two ways to match up your rhetoric with your actions. One is to raise up your actions to match your rhetoric. The other is to lower your rhetoric to match your actions. And the question of democracy promotion as the centerpiece of American foreign policy it represents I would actually think a fundamental choice for American foreign policy when we approach a Russia, a China, a Saudi Arabia, Pakistan. Should democracy-related considerations dominate or would you argue they could be part of it but we simply don't have the luxury to have that dominate?

HAGEL: I found at least in my life a long, long, time ago, Richard, that there are uncontrollables, and you are far better off to devote your energies, your time, your discipline, and your talents to the controllables in life. You factor in the uncontrollables but you can't control what's going on in Pakistan. We can't -- the United States, I don't think. We can't control -- if that was the case we would have bin Laden locked up and found a long time ago if that was that simple. We can't impose ourselves into the so-called Russian democracy -- whatever Putin is doing over there. Darfur is a very clear example -- one of the most horrendous terrible episodes in modern history. Here we are the most powerful nation on Earth with the most powerful economy, powerful army, powerful everything, and we're limited.

The great lessons of history for great powers has always been an understanding of great power's limitations. That doesn't mean you don't try to make a better world -- of course you do. But your question about how do you factor in democracy -- should that be the overwhelming issue -- well, if you want it to be that way okay, but you have to live with the results. What about the Palestinians? They had an election. Shocked Condi Rice on how it came out. Other elections that haven't turned out exactly the way we want.

But if that's the approach you're going to take then you must deal with the elected officials of Iran -- of the Palestinians -- whichever government you're going to deal with because then your option is if you don't you put yourself in a cul-de-sac. If you don't then you just disconnect, and I've never believed you make the world better by trying to isolate Iran or cutting off funds to Pakistan or doing all the other things that we've tried. You can do that. You can threaten. You can make wise choices as to where your aids go -- your relationships go. But all you do is you make a more dangerous world and you assure that you have absolutely no influence over the outcome in Iran or Pakistan if you do that. Tough decisions.

Many of you in this room have worked for Presidents Kennedy and Nixon and Reagan and others, and I remember listening at different times and speeches, books, what these presidents all said about foreign policy, and Ted Sorenson has written books on this. It's never a good easy clean choice in foreign policy. If it was then it'd be easy. Foreign policy is exactly what your question is about -- is about a range of options and ways to deal with those challenges within the framework of your policy, and it seems to me -- and I'll end it with this -- that you cannot have a policy on any country on -- any challenge on any issue unless there's a strategic component to it. You cannot ricochet from crisis to crisis, and I think that's essentially what we've been doing the last few years.

HAASS: Let me raise one other subject before we open it up. It's a subject you've been close to which is energy issues and climate change, and I guess I'll have a double barreled question which is what are we likely to see out of the Congress on energy, and what is it you would like to see which might be different on energy and climate change? Where would you like to see those issues go?

HAGEL: Richard, I've been involved in both of those issues since I've been in the Senate the last 11 years, and I have never believed that you can take energy or the environment and deal with them as separate components. There's a third E I would put in that, and that's the economy. Any discussion -- any policy -- any strategic thinking about the environment or energy has to include the economy, and they are in fact woven into one fabric because whatever you're going to do on national policy or Governor Schwarzenegger's policy in California or state policy on the environment it's going to affect energy consumption. It's going to affect every dynamic of energy, and it's certainly going to affect your economy.

One of the breakdowns that I -- at least I've seen in the Senate and before that when I was in business and traveled around the world on environment is that -- on the environment is that we so separated the so-called environmentalists from the energy companies -- those predominantly concerned about the economy. So we had these two groups coming at each other. Well, we've got to deal with both of them and you have to deal with both of them at the same time. So your question, "So what? That's interesting, Chuck, but what does that mean?" Well, obviously the environment is critical to all of us. There are no boundaries, there are no borders, and we have to deal with it, and we have to have -- frame some general national policy that includes many factors.

Start with transportation. I suspect everybody in this room knows that of the more than 20 million barrels of oil America consumes every day more than half that goes to transportation. So I've never believed that you could get -- come close to getting your arms around the environment until you deal with the transportation piece that sucks so much of the oil consumption out of our society. That means, it seems to me, a wider deeper portfolio of energy -- renewables certainly. Nuclear, I think, is -- and I'm more and more astounded why we do not -- are incapable -- I know why, but how we are so shortsighted that we allow that form of energy to get put aside. Obviously technology is going to drive a tremendous amount of this. Conservation -- we've got to be far smarter and we're doing better.

HAASS: What about CAFE standards?

HAGEL: CAFE standards -- that's part of it, yes, absolutely, and we're doing more of that in the Senate -- all the things that frame up a wise environmental policy and it has to be international. We know that greenhouse gas emissions -- Chinese have now overtaken us or will soon within the next probably 12 months as the largest manmade greenhouse gas emissions country in the world. So it has to be a program, yes, that focuses on us -- what we can do. But we've got to bring an alliance together -- a comprehensive alliance -- that makes sense to the world body, take the lead, and there are going to be variations of that. But if we don't do that then what we're going to see is these great emerging economies -- I mentioned China, India, that go across the board -- they will go to where their resources are strongest. So would America -- so have we.

What does that mean? Coal. Oil. Fossil fuels. More emissions into the air, because the Chinese say -- and I've met with them and the Indians and others -- we've got countries with over a billion people. We've got to find jobs for our people. We've got to bring a standard of living back up. That's important to us for our markets, but it's more important to the United States and the world for stability. So that's a good example of balancing the economy and the environment.

Now what are we going to do in the Congress? You know that we will -- this year we've used -- in the committee hearings in the Senate to tee up some legislation which I think we will get through the Environmental Committee and probably next year in the second session of Congress. The House has passed some bills. How tough those are going to be -- I mean, cap-and- trade is in some of that. There are a lot of new variations but I -- my main point here -- and this -- I'll end my answer this way -- it seems to me we have to be wise and that we've got to factor in the larger framework of all of these dynamics. There's not one easy, quick answer here. But it is going to require all the pieces.

HAASS: With that -- I've got more questions but I will show uncommon restraint and not raise them. Instead, let's open it to the members in the room.

And just wait -- let me see a hand and wait for a microphone, and limit yourself to question, short as it and succinct as it can be. I will be forever grateful.

We'll start with Rita Hauser. Wait for a microphone, Rita.

QUESTIONER: Chuck, I'm tempted to ask you about Palestine and all that, but I'm going to go to a different question.

Lots of people in this room admire you because you were willing to reach across the aisle, break with your party, you sponsored with Biden the first attempt to deal with the Iraq War. Do you believe that bipartisanship will return on the question of foreign policy with a new administration or do you share the view that various scholars have put forth that we are now, perhaps for the long term, a red country and blue country and that there's no way that you can bridge that gap?

HAGEL: I think that this country is faced -- the world is faced with such great challenges that the next president of the United States, regardless of who it is, is going to understand clearly that in order to govern, it's going to require consensus. That means not treating the Congress like an appendage -- like a nuisance. And we have allowed ourselves to be put in that position, quite frankly, for a lot of different reasons. The next president -- I certainly hope and believe, but I think, in fact, the reality will dictate -- will have to reach out to a bipartisan consensus not only in foreign policy, but everything.

When you look across the horizon and the scope of the challenges facing this country -- well, let's just take some more closer to home parochial issues, which many of you are dealing every day. Take entitlement programs. I don't think there's any -- a person in this room that does not understand the seriousness of what's ahead here. Obviously, the complications of what's been transpiring in our economy the last six months -- the subprime mortgage fiasco and how deep that's going to go. But the ripple effect -- I think it shocked a lot of people. It hasn't shocked, not because I'm any smarter than anybody, but it's because we're in interconnected world. When I say ripple effect, what that's done to banks -- financial institutions all over the world -- closed down banks. They had runs on banks in London over this and it isn't over.

So the point being, to answer your question, this next president will reach out for consensus. I think the next president, regardless of who it is, will make a very conscious effort to put a Cabinet together that is bipartisan. I think the Republican and Democrat consensus is -- there'll be enough of that consensus to govern. The president will have to do that. He doesn't -- he or she -- won't have a choice. This is not a luxury to govern unilaterally, arbitrarily or "Let's set the Constitution aside and put Article I of the Constitution aside for right now. I am in charge." Yes, we need a strong presidency. I absolutely agree with that.

But it has to go deeper and wider than that, and I'm rather hopeful because I think history is rather replete with examples of when things get to that critical mass -- and I think they're damn -- they're here now -- and just one question that if you pay attention to in any poll, it's been consistent the last year. The question of "Is America going in the right direction or the wrong direction?" Seventy to 75 percent of Americans all say consistently, across the board, regardless of poll, America's going in the wrong direction. Now that should tell all of us in this business things aren't that good.

When 75 percent of Americans -- not just Republicans or Democrats or independents, all Americans -- and then you can take that down into subdivisions of that question, that tells me if the next president has any hope of governing this country, that president is going to have to bring a consensus of governance together of common purpose govern -- of common interest and certainly there is nothing more immediate or important than foreign policy because that houses the most vital interest of this country, starting with national security.

HAASS: For the record, I also want to say the senator's wearing a blue tie as a statement of his outreach. (Laughter.)

QUESTIONER: As a student of history -- let me ask this in a provocative way -- can you name a less effective Republican administration -- (laughter) -- since Herbert Hoover and will this one have a comparable effect on your party as Hoover's did in the next generation? (Laughter.)

HAGEL: Well -- (laughter) -- you've not failed us, Bob. (Laughter.) I would say that history will make that determination as to -- (boos) -- I'm not finished. I'll give you -- I'm going to give you my -- (laughter) -- people looking for red meat here.

I'll give you my personal opinion. I know I'm not known for that, but -- (laughter) -- that's why I'm so highly regarded at the White House. History will make that determination, as you know, Bob, more than almost anyone. And I'll leave that to history as to its determination. As to my personal opinion, which I have not been shy about sharing, I think as most of you know in speeches or interviews, this administration in my opinion has been as unprepared as any administration I'm aware of, not only the ones that I have been somehow connected to and that's been every administration -- either I've been in Washington or worked within an administration or Congress or some way dealing with them since the first Nixon administration. I would rate this one the lowest in capacity, in capability, in policy, in consensus -- almost every area, I would give it the lowest grade.

And I've thought often, Bob -- I may be wrong on this -- why is that, if I'm anywhere near the bulls-eye? And I have to say -- this is my opinion -- it is my opinion that this is one of the most arrogant, incompetent administrations I've ever seen personally or ever read about. (Laughter.) And when you think of the time and the opportunities that have been squandered by this administration, that's how you judge -- you all know about this, especially those of you in financial services, but anybody who does anything with time.

Time is the most critical commodity you have. If you squander the time, if you squander the moment, if you squander the opportunity, if you squander the boldness, what price do you pay on that? At what cost does that happen? And you know, I think of this administration, what they could have done after 9/11, what was within their grasp. Every poll in the world showed 90 percent of the world for us. Iran had some of the first spontaneous demonstrations on the streets of Tehran supporting America. They squandered a tremendous amount of opportunity.

Now, it will come back. I have enough confidence in our country and in the next set of leaders that will lead. It will come back.

There's where they have failed the country. They've squandered the time and the opportunity that they had, and the next president is going to take four years to not only dig out from under that, but I also would put this caveat on it, and it goes back a little bit to Rita's question: I think this next president is going to have more opportunity to turn things around than almost any president in modern history. And why is that? Because I do believe the confluence of events, the critical mass is here, and if the next president is wise enough, this country will follow a consensus president, a wise president because they want to. The world will follow an America that they want to believe in. Most nations of the world, the leaders and people know that the world is more dangerous when America doesn't lead through wise, consensus leadership. I'm told that by every leader I talk to. They have their problems with us. They all think we're arrogant, whatever it is. But when America is weak, when America is not leading, the world is very dangerous.

And I mentioned earlier, Bob, we are now living in a world where there's little margin of error, whether it's weapons of mass destruction; Internet's changed everything; all the dynamics that are out there.

And I've used Eisenhower a couple of times as an example: I think Dwight Eisenhower -- and I think history's starting to reflect this -- was one of the wisest, best president's we ever had. People, through the last 25 years as they've judged his administration -- "He played too much golf and he was lazy and he wasn't on this maniacal 24-hour day giving speeches and" -- there was a reason for that, I suspect. He was thinking. (Laughter.) He was actually thinking about the big issues facing the world, and he was sitting out somewhere -- and you think of all the things that happened in those eight years, but more importantly, think of all the things that didn't happen. Think of all the crises that he could have gotten us into: the Suez crisis; he could have sent troops into Vietnam when the French begged him to do it in 1953-'54. You go through history of those eight years -- Eisenhower did it right. Nobody's perfect, but he understood consensus. He understood how to govern.

I think that's the model administration, if there is one. And every administration's different. The world's different. Challenges are different.

Now, that's a little far afield from your question, but I think it's only fair to also respond in a way that says, "Well, what do you think, Chuck, is a good administration?" or "What do you think is a model administration in dealing with these great issues?"

QUESTIONER: How can your party recover?

HAGEL: I don't know what next year brings. If you look at the trend lines, they don't look very good for my party. I think the political currents are running as swiftly and deeply and unpredictably as they have in modern history -- maybe ever. What that produces is uncertain. It could produce a very viable third-party candidate for president -- and I'm serious about that, if for no other reason than the majority of registered voters in this country are independents.

HAASS: Plurality.

HAGEL: I mean, not a majority; a plurality -- not Republicans or Democrats.

And so right now if you're betting -- nobody in this room is involved in betting, in hedge funds or anything like that -- (laughter) --

HAASS: We call it "investing" here in New York. (Laughter.) (Inaudible.)

HAGEL: I'm from the prairie, you know. (Laughter.)

HAASS: You're talking to my face here. (Laughter.)

HAGEL: I just want to find a new football coach. That's all I -- (laughter) -- and a few linebackers, while I'm at it up here.

But I think that the political currents and trends are not good for the Republican Party. And so if those trends play out, which is likely, that means Republicans lose the White House, the Democrats add to their numbers in the governorships, the House and the Senate, which I think is likely. I'm not willing to say that's definitely going to happen because we've got another almost 12 months to go. A lot can happen within that timeframe. But the trend lines are not good.

So if the Republican Party experiences one of the great political defeats of our time, it will build back. We happened to have seen that in 1964 in my party, and we built back. We saw these great shifts.

And politics, Bob -- and so many of you know this and have written about this -- politics just reflects society. Politics reflects our times. We respond and we react to where we come from and who we are. In many ways I'm no different from the people that send me here. And so we respond to that, and we will adjust and we'll accommodate and we will find the leadership and the politics required to do what we must do to lead a great country. And politics is the one vehicle that produces that, and that's the highway we use to get there.

HAASS: We've got about 4,000 hands in the room and not much time left.

In the back, yes, ma'am?

QUESTIONER: Hi. My name is Nancy Lieberman. Is there any Republican candidate for president or former Republican potential candidate for president which has a foreign policy consistent -- philosophy consistent with your own or even close to your own?

HAGEL: Well, to be fair to these candidates, they've been put in these awkward formats. It's kind of like the poor man's Gong Show. (Laughter.) And I would far prefer -- and I think most Americans if you're interested -- to give each candidate five minutes and say, "Okay, Senator or Governor, Congressman, tell us what your foreign policy is and would be for the next four years." Take any dimension of that or, "What is your policy regarding America's competitive role in the world, our declining dollar? Should we intervene? Should we not intervene? How do you stop that? How can you stop it?" And so on and so on.

Whether these glancing blows, smart-ass, kind of glib answers that a bunch of wise-ass consultants get together and they put in the minds of all these candidates -- "Now, you want to get this one in. This will be a zinger on old Mitt. Wait until he gets that one." (Laughter.) You know, and, "Here's a good one for Rudy. You know, ask him about all the wives," and so on. (Laughter.)

I mean -- and so America and the world is sitting out there -- "Well, I don't know. Does that have anything to do with what the next set of challenges are?"

And so I -- to your question about who is in my opinion closest to my foreign policy, John McCain is the only one that I -- of the candidates that I've worked closely with -- of the Republicans. Now, Joe Biden -- I'm very close to Joe Biden's philosophy about foreign policy. I suppose of all the candidates out there, including McCain, I'm probably closer to Joe Biden's. And I think Biden would be a very good president. I think Joe Biden would be a very good secretary of State.

QUESTIONER: (Off mike.)

HAGEL: He would be a very good secretary of State in any administration. (Laughter.)

But they haven't had a chance, most of them, to articulate the depth of a philosophy about foreign policy.

And on the Democratic side, the media just pays attention to three candidates: Hillary and Obama and Edwards. And so guys like Biden and Dodd, who actually have something to say -- not that the other three don't, but these two, for example -- Richardson. I mean, look at the experiences of Governor Richardson on foreign policy, for example, or anything -- but those guys get shoved off into the background and they're lucky to get 30 seconds of anything.

So I can't control that, you can't either, but it's unfair to the country. It's unfair to those candidates not to give them an opportunity to answer your question.

HAASS: Let me give one or two other people the opportunity then to ask a question.

Yes, ma'am.

QUESTIONER: Ingar Eliot (sp). Speaking about control, what are your thoughts about two political families -- the Bushes and the Clintons, dominating our political lives for perhaps half a century?

(Laughter.)

HAGEL: Well, that's up to the voters, actually. I've always been of the opinion that we're a nation that allows people to ascend to great heights -- go as far as you can go based on your hard work, and your initiative, and your talent, your capacity. And if that means we have Bushes and Clintons as far as the eyes can see -- I mean, I can't control that, that's up to the people of the United States.

I don't think that they should necessarily be penalized either. I don't think Hillary Clinton, for example, should be necessarily penalized because her husband was president for eight years. She's in the Senate and we've had our -- we've had our belly full of Clintons, and that's it. We've tried the dynasty thing with Bush and it didn't work. So let's -- we're not going to try with Clinton.

(Laughter.)

I mean -- I think you should judge your candidates based on each of them individually. If the American people decide to elect Hillary Clinton, they elect Hillary Clinton. She's -- she's certainly capable.

HAASS: Sir.

QUESTIONER: Thank you. Allan Blinken, The Washington Center. Two assumptions, Senator: One assumption is a Democratic candidate wins the presidency next year; the other assumption is there isn't a Hagel-Bloomberg independent ticket. (Laughter.) It's an assumption.

HAGEL: But thank you. I appreciate that. A lonely Senator is getting a little recognition. (Laughter.)

QUESTIONER: A very simple question, would you accept a position in a Democratic administration?

HAGEL: I would consider a serious offer in any administration if it comes from a serious president who wants to do something to make our world better and our country stronger. (Applause.)

HAASS: Does anyone have a foreign policy question? (Laughter.)

HAASS: I would remind you, this is the Council on Foreign Relations -- (laughter) -- not the council --

HAGEL: This is Richard Haass, by the way -- (inaudible) --

(Laughter.)

HAASS: Mr. Sorensen (sp), I'm counting on you.

QUESTIONER: First, I'm happy to say, on the record, what I have said many times to Senator Hagel privately, which is that his speeches on foreign policy, on the Senate floor and off, make me very proud to be a Nebraskan. (Applause.)

QUESTIONER: My question is, that given the serious foreign policy situation in which this country finds itself, would you be willing to take your philosophy of a consensus administration, and a bipartisan cabinet far enough to accept second place on the ticket of the Democratic nominee?

HAGEL: Was that a foreign policy question? (Laughter.)

HAASS: You can see how little influence I have. (Laughter.) Painful -- painfully true.

HAGEL: Sorensen (sp) gets a break. He's a Nebraskan so, you know, you have to -- and a very smart one too, he's in every hall of fame there is in Nebraska. I think -- I think even women's volleyball, I think he's in that hall. (Laughter.) But he's made all of them, and we're very proud of Ted Sorensen (sp) and his family. And his brother -- if any of you know that his brother was a lieutenant governor, and has a long tradition of public service to our country and our state.

Have I answered the question? Is that -- (laughter.)

HAASS: I think you've answered the -- (inaudible) -- It works for me. (Laughter.)

HAGEL: My normal answer to that would be I don't answer hypotheticals. And I did say, however, that I think this is one of those unique years. That anything's possible, and I do, in politics. I don't think that question is going to be posed to me, so I probably wouldn't have to worry about it.

But I would give you, Ted, the same answer that I gave when asked about would I entertain going into an administration of another party. If there was an area that I thought I could make a difference and influence policy, leadership, outcome -- and you mentioned a couple of what I mentioned here today, consensus governance in foreign policy -- then I would entertain these kinds of serious questions. Again, I don't think that's going to be anything I need to worry too much about.

But we're living through this remarkable time in history that, like all remarkable transformational times, everything's possible. And I think if Americans always believe that everything's possible -- and the world believes that America believes that, and the world believes America can change things for the better, then we're always going to be okay. And I know that's a little Hallmark card philosophical part of the question, but it comes with my answer and it's in my gut.

HAASS: Okay -- all the way in the back. Yes, sir. I don't have my glasses -- is that Allen (sp)? I don't have my glasses on, I can't see this far.

QUESTIONER: Yeah, Allen Gersun (sp). Senator, could you comment on the administration's approach to dealing with the Arab-Israeli issue?

HAGEL: Sure.

QUESTIONER: Thank you.

HAASS: Give your take on Annapolis.

HAGEL: I had an opportunity to spend some time with Prime Minister Olmert on Monday afternoon. About four of us were asked to come talk with him after he met with the president. He laid out his agenda, what his objective were, what he thought was possible.

He was hopeful. He was even moderately enthusiastic but very, very much aware of the realities of what's ahead and what it would require to advance any dimension of this problem. And he was very careful to keep expectations tamped down -- and you all know, many of you have run these kind of shows, Gary Sick's (sp) out there, or other foreign policy pros, their whole life's been involved in this.

I would start answering your question by saying this: I think it is better that we had Annapolis yesterday than not having it, because I think it did, at the very least, present a format, a forum, an opportunity to bring some critical countries around a table at the same time. And I think that's always valuable if it's framed in the right context, with the right amount of expectation.

So I start there. So I think, from that perspective, it was helpful. Like everything in life, though, it's always what happens next, and where do we go from here. Are we going to build on this -- more than a photo op, or just an excuse to say, well, I did what I could do, it's up to you guys. I mean, that's essentially been this administration's approach to the Israeli-Palestinian issues of the last seven years.

And President Bush made it quite clear -- in fact, he almost caustically derided Bill Clinton -- and Clinton's personal commitment, and involvement, and investment, which came close to leading to something, as you all know, in December of 2000 -- in January, 2001.

And by the way -- just one of those accidents of history, I happened to be part of that, by accident, that I was in the Middle East, and Israel, and Syria and Jordan at the time, in 2000, when the Supreme Court came down with its decision that Mr. Gore was going to -- was going to eventually wind up with a Nobel Peace Prize, not the presidency.

And I recall leaving my hotel room -- the Sheraton Hotel in Damascus, on my way to Israel. And the phone rang, and I went back in the room and it was Colin Powell telling me that Bush was the new president. He was going to be the secretary of State. And he knew, Powell knew, because I had talked to him, that I was on my way to Israel, and would I mind being a bit of an interface, at least kind of his player there, while Prime Minister Barak and Richard's friend, many of your colleagues, friend, Martin Indyk, and others were trying to bring these last pieces together. And Powell made it very clear to me that he nor the president-elect wanted to get in the middle of that and didn't want to do anything to inhibit that or intimidate that.

Now, the reason I bring that up, in answering your question, is that I was very disappointed, after this president and his administration took office -- and, by the way, as far as I know, and I know a little something about it beyond 2001, Powell was the only one that pushed the other way -- and Richard, of course, was there with Secretary Powell through part of that -- on re-engaging with the Palestinians on this issue.

And President Bush decided that wasn't the course he wanted to take. And so, therefore -- and I go back to part my answer back to Bob Kaiser -- this administration, I think, squandered seven years and let things get worse. And I think they have festered, and I think the Middle East is more dangerous, more combustible today than it's maybe ever been.

And partly, I think, that's because we can't impose peace. We know that. But we let it drift. We let it drift. I think Iran is stronger today. They're more intimidating today; the Syrian problem, the Lebanese problem. I don't blame it all on Bush. Bush was limited in what he could do. But I do say that we could have taken that a different direction. And so we get to the current situation and your question about yesterday.

The answer, I think, really depends on "Okay, then what happens now?" Do, in fact, we start to bolt these pieces together to get us to where the Palestinians, the Israelis and the United States have now agreed to be, by the end of next year, with the other players -- and they will be players, have to be players -- at the table, and then how do we do that?

Is the president going to be personally committed and involved to do that? Is Rice going to be committed to do that? Now, if you read Maureen Dowd's column today, she takes a little different approach there. She has a little different take on the objectives, and that is, "What do you mean, Iraq? I thought that was over. No, my legacy is the Israeli-Palestinian thing."

Well, as you all know who have been in this business a long time, longer than I have, you've got to juggle a lot of interests -- Afghanistan, the Middle East, Iraq, Iran, Pakistan, Russia, Kosovo. We haven't hit that bump in the road yet. We will on December 10th. And I think that's why Secretary Gates says, "No, I'm not going to follow Secretary Rumsfeld's ideas about we're going to pull more troops out of Europe." Gates countermanded that, and I think Gates was right.

But that would be my general answer. I know it's kind of all over the place, but I think it includes all those pieces that I have responded to your question with. Overall, I'd say it was important to do. Overall I'm glad he did it; probably a few years too late. But we'll see. Let's see.

We have to be hopeful. It's in our interest. We have to push and do everything we can to try to bring this up onto some high ground so that the Palestinians, the Arab world, will start to develop some new confidence in our leadership, that, in fact, we are going to address this; we are going to get to what everybody says they believe is the answer, and that's a two-state solution.

And I asked the prime minister on Monday; I said, "Prime Minister, how much latitude do you believe you have within your own cabinet, within your own coalition government, within your own political environment in Israel, to make some of the tough decisions you're going to have to make?" And he's on not particularly solid footing, as you all know, politically in Israel. And he said, "I recognize that, Senator. I recognize that it's going to take some bold decision-making." Well, we'll see.

I think we're fortunate on the Palestinian side to have the two most significant, most moderate, most intelligent, most comprehensive leaders representing the Palestinians we've ever had in Fayyad, who's the new prime minister, and Abbas, the president. Can they bring enough consensus together, not just within the Palestinian population but within the Arab world, that they're going to need to move this? Those are the real issues that have to come next.

HAASS: With that, I'm going to make a bold decision, which is, alas, it's 2:00. We didn't get to Kosovo. We didn't get to China and a few other things. So that leads me to think that since you've got about 14 months left in the Senate, give or take, I hope we will get you back here at least one more time so we can get to the questions we didn't.

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A decade ago, when the wars in Afghanistan and Iraq began, the United States chose to immerse itself in the greater Middle East when it had little reason to dive in. But now that most Americans want little to do with the region, U.S. officials are finding it difficult to turn away, writes Richard N. Haass.

Senator Jeff Flake discusses the role of Congress in U.S. foreign policy.

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